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How to Get Closing Cost Assistance

July 6, 2016 by jWeb Media

When it comes to closing on your home, lenders are required to give you an estimate of how much your closing costs will be. Typically, home buyers will pay 2 to 6 percent of the purchase price of the home in closing costs and since closing costs are third party fees, they can be different from your estimate.

If you aren’t prepared, these costs can end up being more than you can handle. Depending on your situation, there are many options available to help you get closing cost assistance.

Negotiate Seller Concessions

Most of the time, the seller will not get a full priced offer on their house. By working with your real estate agent, you can negotiate paying full price for the home in exchange for the seller paying your closing costs. In the end, the seller would generally lose more money by lowering the price on the home than funding the buyer’s closing costs.

Consider Forgivable Loans

Forgivable loans are essentially grants that you can use to fund your closing costs. However, they come with a set of rules and restrictions that must be followed. As long as you follow the terms of the contract, like making all payments on time, you will not end up having to pay the closing costs fee and the loan will be “forgiven”.

If the terms are not met, you will have to fully pay back what you borrowed, plus interest. Forgivable loans can sometimes be more trouble than they are worth, so discuss them with your lender first.

Research “No-Closing Costs” Mortgages

Some people may opt for a “no-closing costs” mortgage, which basically eliminates the closing costs. However, it’s only a short-term fix. The closing costs will get put into the total mortgage, increasing your loan balance and your monthly payment. Research this option carefully to make sure you can afford it.

Look at First-Time Homebuyer Programs

There are many first-time homebuyer assistance programs that can help you with closing costs. If you haven’t owned a permanent residence in three years you are considered a first-time homebuyer—even if you have owned a home before.

The Missouri Housing Development Commission (MHDC) offers programs that will help you with closing costs:

  • FHA loans
  • VA loans
  • USDA loans
  • VA loans

MHDC also offers Cash Assistance Programs (CAP) where qualified first time homebuyers are eligible to receive a grant of 4.5 percent of the loan to be used for down payment and closing costs.

Take Money Out of Your IRA

Taking money out of your traditional or Roth IRA is another option for first time homeowners. Every first time homebuyer is eligible to take $10,000 out of these accounts without paying the 10% penalty for early withdrawal. Remember to use these funds within 120 days of taking it out or else it becomes subject to the penalty.

Receive Gifts from Relatives

If you’re lucky, you could receive the money for the closing costs in the form of a gift. Legally, it can only come from a relative and there needs to be documentation signed noting that it is a gift and the money does not need to be paid back.

Though there are many resources available to help you pay for your closing costs, they are often only a short-term fix. Buying a home is a huge endeavor and it’s very important to be financially sound in order to be able to afford the costs associated with it.

Get a Home Mortgage Today

Call Cornerstone Mortgage, Inc. for More Information

Filed Under: Blog, Mortgage Rates Tagged With: closing costs, first time homebuyer, seller concessions

The information provided on these posts have been prepared by a third party company and have been distributed for education purposes only. The positions, strategies or opinions of the authors do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax adviser for full eligibility requirements on tax deduction.

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Guild Mortgage Company is an Equal Housing Lender; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act. OR ML-176;Georgia Residential Mortgage Licensee; GA #6268; NV Banker #1076/NV Broker #1141; AZ BK #0018883; Licensed by the Mississippi Department of Banking and Consumer Finance. Illinois Residential Mortgage Licensee. Kansas Licensed Mortgage Company. Rhode Island Licensed Lender. Licensed by the New Hampshire Banking Department. http://www.nmlsconsumeraccess.org/ Company NMLS ID 3274. All information, loan programs & interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction. Guild Mortgage Company is an Equal Opportunity Employer. Guild Mortgage Company 5898 Copley Drive San Diego, CA 92111 |State of Missouri Principal Location: 11730 Fenpark Drive, Suite 1003, Fenton, MO 63026.Brought to you by Jweb Media.

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